In brief
- Non-core Income Propel Bottom-Line Growth: GOIL posted a modest 1.4% y/y increase in profit-after-tax to GHS 85.9mn. The upturn in earnings was on the back of an 11.5% y/y decline in cost of sales to GHS 16.4bn, a 17.0% y/y increase in sundry income to GHS 75.6mn, a 12.7% y/y decline in operating expense to GHS 565.5mn and lower tax charge for the period compared to prior year.
- Road construction to drive GOIL’s bitumen sales and generate ancillary revenue in 2026: We expect Ghana’s “Big Push” road construction programme to drive substantial demand for bitumen, a critical input in road infrastructure projects. While a significant portion of bitumen will be imported, GoBitumen Ltd, a wholly-owned subsidiary of GOIL PLC, is well-positioned to supply locally and capture a share of this demand. We anticipate that GOIL will benefit from increased sales of bitumen and generate ancillary revenue streams that complement its core fuel distribution operations. We also expect the core fuel distribution revenue to experience a natural lift from ongoing infrastructure expansion drive and economic recovery which provides tailwind for fuel demand. This supports our revenue forecast of GHS 21.6bn (+26.5%) for FY2026.
- Utility tariff hikes pose OPEX headwinds for GOIL: We expect the quarterly utility tariff adjustments to place moderate upward pressure on GOIL’s operating expenses, with electricity rising by 9.86% and water tariffs by 15.92% in the recent revision. These increases will elevate costs across station operations, storage facilities, and administrative activities. However, ongoing cost management and operational efficiency measures should help mitigate some of the impact. Against this backdrop, we project operating expenses to rise by 14.1% to GHS 645.3mn in FY2026.
- Industry Performance Snapshot: Competitive pressures drive strategic pricing: In the second pricing window of December 2025, TotalEnergies priced petrol 17.2% above the GHS 10.67 floor and diesel 14.8% above the GHS 11.32 floor, according to National Petroleum Authority (NPA) data. Over the same period, GOIL set petrol at 12.4% above the floor and diesel at 14.3% above the diesel floor. In contrast, Star Oil, the FY2025 volume leader, pursued a more aggressive pricing stance, selling petrol at only 6.4% above the floor and diesel at 10.0% above the floor. This assertive pricing approach allowed Star Oil to displace the traditional industry leaders and secure market leadership. Thus far in 1Q2026, we observe GOIL’s adaptation of its pricing strategy to match Star Oil’s discounted price in key high-traffic service stations. While this new competitive pricing strategy could claw back some lost volumes for GOIL, a sluggish volume recovery than the price discounts will hold back revenue and weigh on earnings in 1Q2026. We view these competitive dynamics as a headwind to GOIL’s valuation.
- Key risks to valuation: Lower than expected demand for Bitumen, lower-than-expected demand recovery, intensifying competitive pressures, exchange rate volatility, unexpected global energy price shocks, regulatory risks and price controls, unexpected spike in finance costs and supply chain disruptions
Rating Summary:
We issue an ACCUMULATE rating on Ghana Oil Company PLC (GOIL) with a fair value of GHS 4.47. This represents a 6.4% upgrade to our previous provisional fair value of GHS 4.2, despite the stock’s 33.8% year-to-date rally, as we perceive further upside driven by our anticipated volume recovery and ancillary revenue streams. We expect Ghana’s “Big Push” road construction programme to materially lift petroleum demand through higher utilisation of diesel and petrol-powered trucks, construction vehicles and heavy machinery, while intensified equipment use should also support consumption of maintenance fuels and lubricants across project corridors. These dynamics underpin our expectation of a revenue recovery in 2026, with topline projected to rise 26.5% y/y to GHS 21.6bn in FY2026, reversing the 11.6% y/y contraction in FY2025 and supporting a five-year revenue CAGR of 13.6%. While this trails the historical five-year CAGR of 28.7%, the divergence reflects a distortion in FY2022, when revenue surged 175.2% y/y on the back of a 20.4% y/y increase in sales volume alongside upward price adjustments. Excluding FY2022, historical average growth moderates to 9.9%, below our projected 13.6%. Beyond core fuel sales, we expect the road construction drive to unlock substantial demand for bitumen, with GoBitumen Ltd, GOIL’s wholly-owned subsidiary, well positioned to capture part of this demand and generate incremental revenue alongside the core distribution business. Taken together, these factors justify our ACCUMULATE stance, as we believe GOIL remains positioned for sales volume recovery in 2026 amid management’s ongoing cost control measures. We obtained our fair value estimate using a blended valuation approach comprising Discounted Cash Flow (40% weight), Enterprise Value to Earnings Before Interest and Taxes – EV/EBIT (40% weight), and Dividend Discount Model (20% weight). The intrinsic value estimate is based on a 15.01% risk-free rate, a weighted average cost of capital (WACC) of 13.5%, and a terminal growth rate of 5.0%.